Net-neutrality complaints pile up

The ink is barely dry on the Federal Communications Commission's rules to protect Internet access, and claims of violations are already surfacing.

For example, consumer groups say wireless provider Metro PCS is blocking services such as Skype. Level 3 and Voxel, two behind-the-scenes companies that carry Internet traffic, say Comcast has unfairly raised prices for them to deliver online videos to home subscribers.

The companies being accused say it's all untrue. But these first tests of the new regulations have been quite enough for Internet access giant Verizon Communications, which sued the FCC last week seeking to have the rules overturned. The company wants to nip in the bud what it fears could be more regulatory oversight.

"We looked at what was happening with Metro PCS, Level 3 and other noise around the issue and were concerned regulation would expand further into new areas," a Verizon spokesman said.

The legal challenge was expected and the FCC is probably in store for more courtroom tussling over its order on what is known as net neutrality. The Internet-access rule prohibits carriers from blocking or arbitrarily slowing the transmission of any particular Web traffic into consumers' homes.

Access providers say the FCC took on more than it was allowed, pointing to a federal appeals court decision last April that overturned the agency's sanctions against Comcast for blocking file sharing between subscribers.

The FCC has said it believes it is on sound legal footing, citing various parts of telecommunications laws to justify new rules.

"Companies and customers will have to become even more accustomed to living in a world with a basic set of net-neutrality rules," said Rebecca Arbogast, an analyst at Stifel Nicolaus.

The new era of Internet access regulation has set the stage for a battle between companies over interpretations of how far the rules really go.

Level 3's charges against Comcast, for example, raised questions of whether net-neutrality rules apply to business relationships. The order prohibits interfering with Internet services for consumers. But some businesses say Internet access providers can indirectly choke off traffic for videos, e-commerce and social networking services to consumers by hitting the dozens of companies operating networks and carrying content between big cities.

Level 3 owns such networks and also acts like a freight train to carry loads of Internet data through its pipes to customers of Comcast and other home service providers.

Last November, the Broomfield, Colo.-based company struck a deal with Netflix to deliver streaming video feeds to Internet users. It said cable and broadband giant Comcast unfairly tried to edge out the new video competition by charging Level 3 more to connect traffic between different parts of the Internet.

"In the long run, what they are doing is erecting a toll booth," John Ryan, executive vice president of Level 3, said in an interview. "Even if it is not intending to discriminate directly against independent video, the effect is undeniably discrimination of independent video."

Comcast disagrees, saying that as Netflix users gobble up 20 percent of all bandwidth during peak business hours, Level 3 should pay to connect to users. Verizon and AT&T have written to the FCC in support of Comcast, hoping to prevent that dispute from spilling over into their businesses.

Voxel, which also provides data hosting services, says Comcast purposely has kept some lines to customers congested so companies have to pay more for access to users.

"The problem is competition when Comcast has control over 20 percent of all users," said Adam Rothschild, executive president of network architecture for Voxel. "We are asking the FCC to help and to hold Comcast to a certain standard."

The agency's order for wireless networks are far lighter than those for the Internet lines that go into homes and businesses, but consumer groups sounded alarms about a recent data plan by Metro PCS that they think could violate rules.

The wireless carrier last month introduced a basic $40 monthly plan for data that may block users from accessing Skype, consumer groups say. They say the wireless provider isn't being as open about what is included in its own plans. The carrier said it would reply to those criticisms at a later date, but calls them "erroneous."